Britain's Spirit Pub has rejected a takeover approach from cider maker C&C Group, but said the Irish firm had until November 20 to submit a formal offer.
Rival pub owner Greene King is already in talks to take over Spirit in a cash-and-stock deal valued at £723m. Spirit has a market capitalisation of £702m.
C&C, which makes cider under the Bulmers and Magners said it hoped to use Spirit's network of 1,200 pubs to improve its access to English drinkers, but that there was no certainty it would make a firm offer.
The tie-up would allow it to "match the recognition it enjoys in its other core markets" of Scotland and Ireland, C&C said. It would also provide cost synergies and improve its access to capital.
C&C shares closed more than 10% lower in Dublin trade on the back of the news.
Goodbody analyst Liam Igoe said the fall in C&C's share price appeared to indicate investor scepticism about the value of the deal for the Irish firm.
"The market was surprised by this announcement and has difficulty understanding where there are sufficient synergies to make this deal work," he said.
Spirit confirmed in a statement that it had rejected C&C's proposal, but it did not disclose the details. UK media reports said that C&C was offering 115 pence per share in cash and stock, with at least a third in cash.
This would top Greene King's offer of 109.5 pence per share, comprising 8 pence in cash and 0.1322 Greene King shares for every Spirit share.
C&C had said a deal with Spirit would transform the company and enhance long-term shareholder value.
"C&C's management team believe that a combination of C&C's brands with Spirit's high quality, well-located pub estate is the most effective way to optimise shareholder returns in a competitive UK market," the company said in a statement.
